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Export Finance Pros and Cons

Have you heard about export finance? Not yet? Well then, allow us to introduce it to you along with its slew of pros and cons.

First of all export finance is a means by which companies trade and sell their goods abroad with the help of a financial provider who in turn facilitates collection, customer credit screening and other relevant documents to facilitate the transactions.

We all know that many business entities feel intimidated and apprehensive about taking a leap or pushing forward to the next step in their ventures due to the risks that they could potentially face and the burdensome task that may or may not turn into actual profits. Furthermore, foreign buyers much like their domestic counterparts prefer to delay their payments up until they receive, make use and/or sell the products. This puts potential exporters at a disadvantage. To fix the dilemma and the choke point, export finance comes into the picture.

There are many benefits that export financing can provide companies. Let’s name some of them.

First, it allows entities to take their business to the next level. Domestic sales are great but who would not want to grow internationally too? Who doesn’t want to expand? All entrepreneurs want growth and expansion and export is one way to achieve this.

Second, credit screening of customers from foreign countries can prove to be very challenging given the distance. Even in today’s digital world, there will still remain a time lag. Plus, one can never be fully aware of the various credit regulations on a specific country. An export finance provider takes care of this task and does the screening for you to only extend credit sales to creditworthy clients.

Third, it helps maximize sales potential. By going abroad, one branches out their market creating more potential for sales and profits. After all, you can never gain a loyal following if people are not aware of your presence.

Fourth, services such as export factoring and discounting can help hasten up collections even more and bring in cash to companies equivalent to their credit sales even if foreign customers have not paid their invoices yet.

Now as for the disadvantages, there are a relative few. Export finance may not be suitable for companies that does not have a strong potential for export trade. First of all, it would be irrelevant. This is why careful deliberation must first be done when planning about financing methods.

Have you heard about export finance? Not yet? Well then, allow us to introduce it to you along with its slew of pros and cons.

First of all export finance is a means by which companies trade and sell their goods abroad with the help of a financial provider who in turn facilitates collection, customer credit screening and other relevant documents to facilitate the transactions.

We all know that many business entities feel intimidated and apprehensive about taking a leap or pushing forward to the next step in their ventures due to the risks that they could potentially face and the burdensome task that may or may not turn into actual profits. Furthermore, foreign buyers much like their domestic counterparts prefer to delay their payments up until they receive, make use and/or sell the products. This puts potential exporters at a disadvantage. To fix the dilemma and the choke point, export finance comes into the picture.

There are many benefits that export financing can provide companies. Let’s name some of them.

First, it allows entities to take their business to the next level. Domestic sales are great but who would not want to grow internationally too? Who doesn’t want to expand? All entrepreneurs want growth and expansion and export is one way to achieve this.

Second, credit screening of customers from foreign countries can prove to be very challenging given the distance. Even in today’s digital world, there will still remain a time lag. Plus, one can never be fully aware of the various credit regulations on a specific country. An export finance provider takes care of this task and does the screening for you to only extend credit sales to creditworthy clients.

Third, it helps maximize sales potential. By going abroad, one branches out their market creating more potential for sales and profits. After all, you can never gain a loyal following if people are not aware of your presence.

Fourth, services such as export factoring and discounting can help hasten up collections even more and bring in cash to companies equivalent to their credit sales even if foreign customers have not paid their invoices yet.

Now as for the disadvantages, there are a relative few. Export finance may not be suitable for companies that are does not have a strong potential for export trade. First of all, it would be irrelevant. This is why careful deliberation must first be done when planning about financing methods.